One of our directors is a shareholder for a company that wants to acquire a loan from us. The director has a 15.4% stock ownership in the company wanting the loan. The director will not be a guarantor on the loan. Do we have to have board approval if we decide to do the loan for the company?
Our regulators have requested that our bank more clearly define and document its credit policies. What should be included?
Is it a violation if the board adopts a resolution under Reg O and names executive officers, but excludes vice presidents who work and submit policies to the board for approval? Senior management reviews the policies before they are submitted to the board. What constitutes participation in the major policy making function under Reg O?
What individual risk assessments is a bank expected to perform? How do the individual risk assessments fit together with an "enterprise risk assessment"?
Is the following Q & A answered by BOL Guru, David Dickinson still applicable for 2008? <a href="/qa/mobile-home-owners-insurance-lieu-nfip-wyo">Mobile Home Owners Insurance In Lieu of NFIP/WYO?</a> I have been told that in 2007 there was a change where a separate flood policy is needed for mobile home flood coverage.
I just attended a webinar about Flood Insurance. Something mentioned during the webinar was that there can be a problem if the bank's flood determination is different from the zone determined by an insurance company. An insurance agent I recently spoke to said that a claim wouldn't be denied, but I can't find any hard evidence to show that conflicting zones can be a problem and what the problem would be. Many times a customer obtains a flood policy, oblivious to what zone the insurance agency has listed and we, the bank, are not aware until the policy is paid for and in place. Should the lender have better communication with the customer? Should we give a copy of our determination to the borrower and tell them to show it to the agent? Due to a recent map change we have many existing customers in a flood zone A or AE and many of their policies are coming in with zone X.
Is the amount of hazard insurance that should be required on a real estate secured loan calculated as the appraised value less land value or loan amount less land value? Does it differ according to property type?
What is the proper method for determining the correct amount of builder's risk coverage required on a real estate construction loan? I’m thinking it should be the "as-completed" appraised value, less the amount of the land, unless the loan amount is less than that. Some lenders want to take the loan amount, net out the land value and insure the loan for the balance. I think the builder's risk coverage should always cover the value of the structure or at least the loan amount. Am I correct? I have found insurance requirement guidelines by HUD for construction of residential property, but nothing as a guideline on commercial real estate construction.
I have an originator who wants to take an auto as additional collateral on a HELOC to cover a collateral shortfall. Would we have an audit issue?
We have a loan in a flood zone and the loan balance is $37,000.00, but there is only $16,600.00 in flood insurance. We have sent the notice about the shortage of insurance and still no additional flood insurance has been purchased. Should we force place flood insurance for the full amount of the balance or only the difference between the loan balance and the flood insurance purchased by the customer? Can we have two insurance policies on one property?